AGL and Origin writedowns: stranded assets in real time
AGL Energy and Origin Energy write-downs are a demonstration to investors that electricity retailers can no longer be relied upon to produce the returns they once did.
Commenting on the AGL and Origin announcements, Dan Gocher, Director of Climate and Environment, said:
“For years, AGL and Origin have attempted to convince their shareholders that they’re effectively managing the energy transition—these writedowns prove that’s not the case. Their coal-fired power stations are likely to be stranded before they voluntarily close them.
“This is a problem largely of the companies’ own making, having acquired the coal-fired power stations from state governments in the last decade, knowing full well the risks embedded in emissions intensive assets.
“As the cost of maintenance of these ageing coal-fired power stations increases, and electricity prices remain low, AGL and Origin will simply not be able to generate the profits they once did. Both companies will face increasing financial pressure to accelerate the closure of their coal-fired power stations.
“Investors in these companies are already suffering from depressed share prices. In order to turn these companies around, they must pressure them to invest in the future, not in the dirty fossil fuels of the past”.
AGL’s Capital Expenditure, 2012-20
Capital expenditure AU$m
Growth and transformation
Source: AGL Energy Annual Reports, 2012-20
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ACCR’s climate program aims to accelerate the energy transition to a low carbon economy in line with the Paris Agreement. We engage with listed companies on their climate risk disclosure and the need to set emissions reduction targets consistent with the Paris Agreement, and we also push for reviews by listed companies of their industry associations’ climate policy advocacy.